June 4, 2009

Roots of Financial Disaster

"Countrywide's example makes a mockery of the idea that government pressure to expand low-income and minority housing can be blamed for the housing boom and bust. Countrywide watered down its underwriting guidelines and gave mortgage loans to anyone who could sign a piece of paper for one reason, and one reason only -- to generate revenue...Growing market share kept Countrywide's stock price high. Wall Street's appetite for securitized mortgage products meant it could unload whatever bad loans it had made as fast as it could repackage them. Government mandates to increase homeownership hardly appear to be a significant factor in Countrywide's sage of greed and stupidity."